A megegyezés az IMF-fel erősíti a forintot - FT

IMF talks move boosts Hungary

Link to the full article Financial Times, August 24 2010

Hungary said on Tuesday it was likely to return to talks with the International Monetary Fund in the autumn, providing a boost to investor confidence and helping its currency erase a two-day slump.

The IMF walked away from budget talks in Budapest last month following a range of policy disagreements with Hungary?s new centre-right government, including a controversial Ft200bn ($898m, ?708m, ?580m) levy on the country?s financial sector.

Following the collapse of the talks, Viktor Orban, the prime minister, vowed to restore Hungary?s ?economic self-rule? and said Hungary needed only to talk to the European Union about cutting its deficit, not the IMF.

The government has in the past issued confusing or contradictory statements regarding its intentions towards the IMF and some analysts remained sceptical about Hungary?s determination to return to talks.

Many believe Mr Orban?s defiant tone over the past few weeks has been influenced by October?s municipal elections, which his centre-right Fidesz is determined to win.

Hungary has been trying to rein in its deficit since 2006 and many Hungarians are tired of austerity.

?The negotiations will likely continue in the autumn and an agreement will be reached,? Hungary?s economy ministry told Bloomberg News on Tuesday night.

The news provided a boost to the forint, which had lost more than 2 per cent this week amid doubts about Hungary?s growth and inflation outlook.

The National Bank of Hungary on Monday revised lower its forecast for economic growth next year and said inflation would be higher than previously expected. Heeding the unexpectedly hawkish tone, analysts said interest rate rises could no longer be ruled out.

Hungary turned to the IMF in October 2008 for ?20bn in standby credit. Although it has not drawn on this facility for some months, investors view it as an important safety net.